Chevron has announced that Chubu Electric Power Co. of Japan has signed a binding agreement to purchase 1 million tons of LNG annually from the Wheatstone project in Australia for up to 20 years.
Wheatstone is a joint venture owned by Chevron (64.14%), Apache Energy Ltd. (13%), Kuwait Petroleum Corp. (7%), Royal Dutch Shell Plc. (6.4%), Kyushu Electric Power Co. (1.64%) and PE Wheatstone Pty Ltd., which is partly owned by Tokyo Electric. The Chevron-operated Wheatstone project, in Western Australia, will eventually have an 8.9 million-ton annual LNG capacity with two LNG trains and a gas plant. Wheatstone will begin supplying LNG in 2016.
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The deal means that more than 80% of Chevron's equity LNG from Wheatstone is already covered under long-term purchase agreements with Asian customers. It also signals that the Wheatstone project has solidly demonstrated its geographical status and market capacity to supply Asia customers.
Chevron (NYSE: CVX) is very well-positioned here. Overall, it holds an 80.17% equity interest in Wheatstone, as well as in the fields that provide 80% of the project's gas.
Japan-the world's largest LNG importer-bought 87.3 million tons of LNG last year alone, with its utilities boosting demand for thermal power generation in the wake of Fukushima.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More